The Fed Tends Not to Use Discount Policy as Its

question 34

Multiple Choice

The Fed tends not to use discount policy as its principal tool in influencing the money supply since

• A)discount loans do not affect the money supply.
• B)it does not have as much control over discount loans as it has on open market operations.
• C)it is prohibited from doing so by an act of Congress.
• D)it prefers to use reserve requirements.

Understand the concept of marginal cost and how it affects firm's decision-making in a perfectly competitive market.

Analyze the profits maximization condition in a perfectly competitive market.

Comprehend the relationship between total revenue, total cost, and profit maximization.

Understand market dynamics and the effect of price changes on firm's production decisions.

---

Definitions:

Residual Value

The estimated amount that an asset is expected to be worth at the end of its useful life.

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Depreciable Asset

An asset that loses value over time due to wear and tear, and its cost is expensed across its useful life.

Depletion Rate

The rate at which a natural resource is used or consumed, important for accounting and valuation of resource-based companies.